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News - Details

Since 2004, twenty large federal agencies admit paying out an astonishing $1.2 trillion in improper payments. That amounts to more than one-quarter of President Trump’s proposed $4.7 trillion budget for 2020. Last year, these improper payments totaled $140 billion – that’s about $12 billion per month.

But what exactly is an improper payment? Federal law defines the term as "payments made by the government to the wrong person, in the wrong amount, or for the wrong reason."

In other words, there’s a lack of basic in-house financial controls within the largest federal agencies. When people or companies receive money they don’t deserve, it erodes our trust in government, our economy and government’s ability to finance everything from defense to health care.

Improper payments in health care are especially troubling. In 2011, when President Barack Obama signed the Affordable Care Act, Congress vowed to help pay for it by rooting out waste, fraud, corruption and taxpayer abuse from the Medicare and Medicaid programs.

It never happened.

In fact, the improper payments within these programs soared from $64 billion in 2012 to $85 billion today.

The biggest offenders across government include: Human & Human Services (HHS); Internal Revenue Service (IRS); Social Security Administration (SSA); and the departments of Defense (DOD), Labor (DOL), and Education (ED).

What were some the ways these agencies wasted our tax dollars last year?

Dead people received $1 billion in benefits. Medicare, Medicaid, social security payments and also the federal retirement annuity payouts (pensions) kept flowing to dead recipients.

College students were overpaid by nearly $6 billion in Pell Grants and student loans. Approximately four percent of all payments were improper, and ED forecasts a worse figure in FY2019.

Social Security recipients were overpaid by $10 billion. Six million active Social Security numbers belong to people aged 112 and older. Here’s the problem: there are only 40 people in the entire world aged 112 and over.

$18.4 billion in Earned Income Tax Credit overpayments. Millions of low-income families who Congress designated as qualified recipients were overpaid billions of dollars. The program is rife with errors: the government overpaid $1 in every $4 to beneficiaries. (The IRS administers the program and responded to our request for comment here.)

The government paid doctors who were stripped of their medical license. Farmers were overpaid $242 million on crop subsidies, insurance, direct payments, and loans. Unemployment insurance recipients received $3.6 billion in over payments administered by the states through the Department of Labor.* The Pentagon overpaid $1.2 billion for things like civilian, military, retirement and travel pay, health benefits, and more.

Here are 10 examples of what $140 billion in improper federal payments could have purchased:

10 billion Netflix subscriptions ($13 monthly)

320 million fancy bicycles ($425 each)

140 million root canals ($1,000 each)

28 million teenagers getting braces ($5,000 each)

5 million hip replacements for seniors ($32,000 each)

700,000 additional doctors hired at VA ($200,000 each)

23 border walls with Mexico ($6 billion each)

12x updating the nuclear arsenal ($11 billion each)

7x U.S. census count ($20 billion each)

1x year of all Federal pension payouts ($130 billion)

The lack of accounting control is so bad that the $140 billion cost in bureaucratic mistakes exceeded the entire executive agency payroll. Despite this, 99.7 percent of the federal workforce is rated "highly successful," and more than one million bureaucrats received a performance bonus last year.

The 1.3 million bureaucrats in the executive agencies earned $120 billion last year according to our data at OpenTheBooks.com. Therefore, for every $1 million in federal payroll, the agencies admitted to $1.2 million in improper payments.

So, aren’t federal agencies working to recapture these improper payments? Not exactly. In fact, outside of overpaid contractors, the Office of Management and Budget says that recapture audits don’t make financial sense. They argue that it costs too much to claw back the improper payments.

The American people need to raise our voice. It’s time to crack down. Every dollar that goes toward an improper payment is a dollar taken from a taxpayer or diverted from a critical government function. Tell Congress and the Administration to put in place better safeguards to prevent this massive waste of national resources.

Note: We requested comment from each agency mentioned in this piece. *The Department of Labor has been aggressively working with states to address unemployment insurance improper payments, providing intensive oversight and technical assistance to states with the highest improper payment rates and providing tools and resources to help all states better prevent, detect, and recover improper payments.